Embodiments of the present invention are directed to systems, apparatuses and methods for processing transaction data, and more specifically, to generating predictions concerning consumer behavior and using that information to assist in deciding whether to authorize or deny a transaction. Embodiments of the invention may be used for multiple types of transactions, including, but not limited to, payment transactions, ATM (automated teller machine) transactions, money transfer transactions, etc.
Consumer payment devices such as debit cards or credit cards are used by millions of people worldwide to facilitate various types of commercial transactions. In a typical transaction involving the purchase of a product or service at a merchant location, the payment device is presented at a point of sale terminal (“POS terminal”) located at a merchant's place of business. The POS terminal may be a card reader or similar device that is capable of accessing data stored on the payment device, where this data may include consumer or account identification or authentication data, for example. Some or all of the data read from the payment device is provided to the merchant's transaction processing system and then to the acquirer, which is typically a bank or other institution that manages the merchant's account. The data provided to the acquirer may then be provided to a payment processing network (e.g., a network that includes a payment processor) which processes the data to determine if the transaction should be authorized by the network, and assists in the clearance and account settlement functions for the transaction. The authorization decision and clearance and settlement portions of the overall transaction may also involve communication and/or data transfer between the payment processing network and the bank or institution that issued the payment device to the consumer (the issuer). Transactions in which a consumer payment device is presented to a merchant or accessed by a point of sale terminal are termed “card present” transactions since the payment device is in the same physical location as the merchant or terminal.
In addition to card present transactions, a consumer may also initiate a transaction in a situation in which the payment device is not in the same physical location as the merchant or terminal and instead the relevant data is provided over a communications network to the merchant (termed a “card not present” transaction). For example, a transaction involving the purchase of a product or service may be initiated by a consumer by providing payment data from a remote location to a merchant over a network such as the Internet. Transactions of this type are typically initiated using a computing device such as a personal computer or laptop computer. Transactions may also be initiated by using a mobile device such as a cell phone or personal data assistant (PDA) that communicates with a merchant or service provider directly or indirectly over a wireless network (which may be configured to enable data transfer between the wireless network and the Internet). Thus, payment information for a transaction may be provided using a payment device and point of sale terminal, remotely located computing device, or mobile device capable of wireless communications, among other methods.
Given the large number of transactions and amounts of money involved, the detection and prevention of fraud is an important consideration of any transaction processing system. In order to address this problem, payment processors and others involved in authorizing payment transactions have developed data analysis tools designed to identify fraudulent behavior that is part of a transaction, within an individual account, or over a set of transactions as a whole. One of these tools is termed “Advanced Authorization” and is described in U.S. Patent Application Publication No. US 2005/0149455, which as noted, is incorporated by reference into the present application in its entirety. Advanced Authorization may be used as a form of transaction risk analysis to provide an issuer with an estimate or indicator of the risk associated with a specific transaction. This allows the issuer to consider the risk involved prior to authorizing the transaction. If the risk analysis indicates an unacceptable level of risk for the particular transaction, then the issuer can refuse or deny the transaction. This prevents the consumer from being able to complete the transaction with a merchant.
Although Advanced Authorization and other forms of risk analysis provide a benefit to the parties involved in transactions, such transaction data processing tools do have disadvantages. A first disadvantage is that they increase the computational burden on the payment processor or other part of the transaction data processing network that implements the risk analysis tool. Secondly, transaction denials tend to create a disincentive for honest consumers to use the payment processing system. This may be termed the false-positive decline problem, where a transaction that is incorrectly identified as fraudulent or potentially fraudulent is refused, leading to the loss of a sale and in some cases, the creation of a negative impression on the part of a consumer. Both of these disadvantages or problems suggest that if possible, it would be desirable to reduce the instances in which a risk analysis method is applied to a transaction authorization request.
What is desired are a system, apparatus and method for determining whether to generate a risk analysis for a proposed transaction as part of the transaction authorization process, with the goal of reducing instances in which such a risk analysis is used. Embodiments of the invention address these problems and other problems individually and collectively.